Launching 40 products each year is how Logitech International (NASDAQ: LOGI) keeps up with current consumer technology trends, attracting more new and repeat customers to generate additional growth each year.
The company also consistently designs and manufactures products that make a user’s time more efficient and productive, especially for diehard videogamers and frequent users of desktop computers and laptops.
Logitech reported the company’s first quarter of fiscal year 2027 net sales rose to $1.23 billion from $1.15 billion, up 7% in U.S. dollars, which beat analysts’ expectations of $1.2 billion. The company that manufactures wireless keyboards, mice and webcams posted a profit of $235.7 million, compared with $146 million a year ago.
Video collaboration sales grew by 9%, which was before a 13% price hike was implemented to offset inflation costs for memory chips. The company said its memory supply is secured for the remainder of fiscal 2027.
Logitech’s gross margin was “up an impressive 270 basis points, excluding tariffs and despite a 100 basis point drag from the Middle East conflict,” wrote Rob Hales, a senior equity analyst for Morningstar Holland, a wholly owned subsidiary of Morningstar. “Logitech expects a similar 100 basis point drag in the second quarter.”
Shares of Logitech rose by 10.5% during the past six months, offsetting the 10.3% loss over the past year.
The stock fell in July when the company disclosed that a “serious” incident at a semiconductor supplier’s manufacturing facility would impact future demand. But Logitech said it is “working on multiple mitigation plans.”
Management still forecasts 2026 non-GAAP operating margin to reach the “high end of the 15% to 18% long-term target range, helped by strong operating performance and this quarter’s tariff refunds,” the company said.
The incident in late June resulted in a temporary closure and is anticipated to have no impact to its fourth quarter earnings, Logitech said. The company will face some headwinds in the short-term, including a loss of $20 million in net sales during the second quarter and up to $200 million in net sales for the third quarter.
For the current second quarter, the company estimates revenue to reach between $1.185 billion and $1.22 billion.
Securing more memory chip supply
Ensuring enough memory chips are available is often a challenge for companies that manufacture electronic goods. CEO Hanneke Faber has been working to resolve that issue the past few months by personally going to Logitech’s supplier’s offices and plants in Switzerland and Asia.
“I’ve spent my summer begging, borrowing and stealing chips,” she told the Wall Street Journal in an article. “I don’t want to say steal. Begging and borrowing!” she added.
Memory and storage chips have been in great demand recently as more companies are turning to artificial intelligence to conduct tasks and achieve greater efficiency. The number of data centers being built to fuel the AI growth is also contributing to the shortage.
The supply chain obstacle is a large hurdle for Logitech since nearly “every one of our products depends on some sort of chip,” Faber said.
The growing interest in using AI is fueling demand and Faber does not see the supply of memory and storage chips improving for at least 12 to 18 months.
Logitech also designs innovative peripheral products such as Superstrike, its latest gaming mouse that sells at a premium for $180 compared to a typical gaming mouse that averages for $60 and has set the clicking-speed Guinness World Record, she said.
The company has also shifted how it is distributing its products and instead is using its distribution centers in Holland and China to serve some of its customers in Europe, the Middle East and Africa. The largest distribution center in that region is in Dubai, but shipping has been impacted with the closure of the Strait of Hormuz.
Logitech has adapted quickly to how its customers use its consumer tech such as implementing gaming pedals. A growing number of customers are using voice text, especially coders.
“I think of Logitech as kind of the eyes, the ears and the hands of AI,” Faber said. “We watch coders. And, yes, they’re coding with microphones, they’re coding with headsets, they’re speaking to their code. But, because they want to go so fast, some are using gaming pedals to code now with voice. So that was new, but hey, we’re the market leader in that, too.”
Logitech has been able to maintain its market share by designing cutting-edge products for gaming, video collaboration and personal workspaces. The company targeted the high-growth gaming and video collaboration markets to gain an advantage, wrote Rob Hales, a senior equity analyst for Morningstar Holland.
While Logitech faces competition from larger companies such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Dell (NASDAQ: DELL) and Lenovo, the company’s “complete focus on the peripherals category, arguably a noncore business for some of its competitors, enables it to benefit from its brand and maintain high market share,” he said. “The company has expanded from being primarily a standard mouse and keyboard producer to new categories such as high-performance gaming products and video conference room cameras, which are the key drivers of its future growth.”
Logitech has been able to build “meaningful brand equity and a leading market position” and held about 53% share in pointing devices, 49% in keyboards and combos and 72% in webcams as of 2022 “with share reportedly trending higher in recent years,” Hales wrote. “These categories also tend to carry the strongest margins outside of video collaboration.”
The company will generate high-single-digit revenue growth annually over the medium term, “driven by gaming and video collaboration, where we expect strong double-digit growth over the next several years,” he added.
Staying on top of current trends adopted by consumers and gamers and manufacturing creative products to meet the latest demand for workspaces will help generate more revenue and growth for Logitech.
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